On Campus vs. Off Campus: How Your Housing Choice Impacts FAFSA

Choosing to live on or off campus is more than just a lifestyle decision; it can also impact your financial aid.

Many students rely on the Free Application for Federal Student Aid (FAFSA) to determine their eligibility for loans, grants, and work-study programs. However, few realize that it also factors in your living arrangement while at school. Whether you stay on campus, off campus, or with family, this influences how your school calculates the “Cost of Attendance” (COA), which shapes your aid package.

How Housing Affects Student Aid

While the FAFSA doesn’t ask detailed questions about whether you rent or plan to share a dorm room, it does ask you where you will live, whether it is:

• On-Campus: In housing such as residence halls or dorm rooms
• Off-Campus: In housing that the school doesn’t own, usually an apartment or rented house
• With Parents or Relatives: Commuting from home

Your answer affects your COA, or the estimated yearly cost to attend school. COA covers tuition, fees, room and board, books, supplies, transportation, and personal expenses.

According to FAFSA rules, federal aid compares your expected family contribution (student aid index under new rules) to the COA. The difference is your financial need, which sets your eligibility for loans, grants, and work-study.

Living on Campus

If you live on campus, the school sets room and board based on actual dorm and meal plan costs, bundling these into your tuition. Typically, this leads to a higher COA than living at home and can increase your aid eligibility.

Student aid bills are paid directly to the university, and costs are fixed and predictable.

However, this often means greater expenses, since living off campus is generally more affordable.

Living Off Campus

If you opt for off-campus housing, the school applies a standard allowance for living expenses, including utilities, rent, and food, as part of your COA. Actual costs, however, may vary widely.

Off-campus living offers the opportunity to find more affordable housing, split the rent with roommates, and save money by preparing meals at home. You may also reduce expenses below dorm costs if you budget effectively.

Living off campus also has its downsides, including:

• If your rent exceeds the aid provided, you must pay the difference.
• Leasing an apartment or house means handling utilities, groceries, and security deposits.
• Because student aid is disbursed in lump sums each semester, not monthly, you need to budget carefully.

Living with Parents or Relatives

The FAFSA assigns the lowest COA for students living at home, assuming the family covers the cost of room and board. This brings significant savings on housing and meals, helping reduce total student loan debt.

A drawback of living at home is the cost of commuting. Still, it is the best option to cut debt.

Comparing Living Options

For example, if three students attend the same university with $15,000 in tuition and fees, On-campus room and board is $11,000 (COA $26,000), off-campus is $9,000 (COA $24,000), and living at home has no room and board charge (COA $15,000).

• Off-campus room and board are $9,000, so the COA is $24,000.
• Living at home incurs no room and board charges, so the COA remains $15,000.

If they all have a Student Aid Index of $10,000, the on-campus student shows more “financial need” and can qualify for more need-based aid than the student living at home.

Since FAFSA bases aid on estimated rather than actual expenses, you may qualify for less by living at home—but with lower costs, you’re likely to graduate with less debt.

4 Practical Tips for Making the Correct Housing Choice

Here are four tips to help you make the correct housing choice:

1. Ask a financial aid officer for a COA breakdown for each housing option.
2. Plan a budget based on your actual rent, groceries, and utilities.
3. Keep records such as leases, receipts, and utility bills if you are living off campus. You may need these for aid verification.
4. Consider the long-term effects of each option. More aid means more to repay when payments start. A more affordable housing option reduces debt and eases repayment.

Make the Smart Financial Choices

Your housing choice affects more than your lifestyle—it shapes how schools determine your financial aid. Living on campus usually raises your COA and boosts your aid, while living off campus or at home can lower both your aid and your long-term expenses.

By carefully weighing your housing options and selecting the one that fits your current and future financial needs, you position yourself for a stronger academic experience and a healthier financial outlook.